Volume 48, Issue 4- April 2013
Put Up – Or Shut Up
It was an interesting but totally surprising question that was thrown my way publicly after I had completed a presentation at a recent glass industry event. And because sometimes I don’t think before I speak, I answered, even though the question posed had absolutely nothing whatsoever to do with the topic that had just been covered. It quickly turned into a discussion which morphed into a debate and then somewhat miraculously, circled all the way back to the glass and metals industry which was what my presentation dealt with in the first place.
The question was this … if demand in the United States for gasoline is at its lowest level since 2006 (which reportedly it is) and crude oil production within the American borders is at its highest level ever (which reports say it is), and if we are now producing enough oil to need no imports (which is also reportedly true at the moment) then why are gasoline pump prices higher than they have ever been? I know, it has nothing to do with the glass business … or does it?
Gas vs. glass! The limb I am going to climb out on here is a dangerous one, but I am entitled to my opinions and not afraid to share them. The short, simple answer to the gas question is this … the economy, especially as it relates to oil and gasoline, operates globally. We are indeed pumping more oil out of the ground than ever before and gasoline consumption is way down. If you are an oil producer and/or gas refinery operator, you are going to sell your products at the highest possible price. And, as long as a company can sell its efficiently refined gasoline to Mexico, Brazil, or China at a price higher than it can sell it in Indiana, Arizona, or Utah, that is what they’ll do. And this is a good thing. Exports of any product bring real money back into this country. Besides, high gasoline prices force more conservation which in turn keeps consumption, not to mention pollution, down which is good on a number of levels. Yes, this subject is much more complicated than I have just attempted to make it, but the point is that the world of commerce and industry operates globally.
Many economists quickly claim that we Americans have only been able to sustain our higher than most standard of living because we have allowed this global economy phenomena to provide us with low cost products imported from around the world at prices below what we can make those products domestically. In other words, those shoes you’re wearing would cost a whole lot more if it wasn’t for those hard-working, poorly paid people in third world countries toiling away for 10-12 hours a day. Others would argue that the gains of this course of action are short term because of job losses and the wealth outflow that comes from such activity. Again, there are lots of arguments on both sides of this issue and depending on what you do for a living, your view may be a bit slanted.
So … what does all of this have to do with the glass and metal industry? Quite a bit actually. You see, the foreign manufacturers have arrived in force and it has made a lot of people quite uncomfortable. I have heard it stated publicly in large gatherings of industry players that it is just a matter of time before all of the glazing contractors in the U.S. are nothing more than subcontract laborers for the Chinese manufacturers. As an example of how right these comments might be, I once had a brief conversation with one of North America’s largest general contractors in New York, and during it he confided that, on a recent bid for a New York area high-rise, three of the four bids received were from Chinese suppliers and that the non-Chinese bidder was so much higher that their bid wasn’t even considered. Yes, the Germans, Japanese, Koreans and Columbians are hitting North America hard as well, but the Chinese seem to be setting the pace … or perhaps setting the price … is the better way of stating the situation and typically that price is quite low.
Some industry pundits (and you know who you are) have been chirping away at this so called Chinese situation for a couple of years now while others have been crying “foul” about it as well. So it should have come as no surprise when three California-based based glazing contractors joined forces, put aside their competitive differences and went to work on what they thought was a harmful, government subsidized business practice that allowed Chinese suppliers to compete unfairly with domestic suppliers. They pooled their resources, including their own hard earned money, found themselves a very bright young attorney who wasn’t afraid of a good fight, and to the surprise of many, including yours truly, were successful in getting the Commerce Department to find certain Chinese manufacturers guilty of dumping their curtainwall products onto the American market and further, imposed very stiff fines on them for it.
Some have disagreed with the government’s findings and actions but it certainly appears as though many more are fully supportive and even hopeful that more action will be taken against other companies and countries believed to be using subsidies to dump their underpriced products here. I had the chance to interview the attorney representing the American companies, David Spooner of Squire Sanders, and he quickly pointed out that the battle is far from over. In many ways it is just beginning not only because the legal battle will continue on for awhile but also, funding is needed to get people to the ports of entry to educate the inspectors involved while verifying that arriving goods are properly (legally) labeled. As with most things, money is needed and will continue to be needed. The guys who have carried the battle on behalf of an entire industry are Architectural Glass & Aluminum, Walters & Wolf and Bagatelos Architectural Glass. If you believe in their cause, and I do, you owe them your thanks and maybe something else as well. A fund has been established to support this effort so here’s your chance. Get out your check book and send some bucks to the Glass Management Association. You can contact John Kusper Jr. (NCGMA director @ 510/426-1184 or email@example.com) for more specific instructions. Or if you want to be completely anonymous, give me a call and we’ll figure something out. Time to quit your whining. Time to put up, or shut up!
Lyle R. Hill is the managing director of Keytech North America, a company providing research and technical services for the glass and metal industry. Hill has more than 40 years experience in the glass and metal industry and can be reached at firstname.lastname@example.org. You can read his blog on Wednesdays at lyleblog.usglassmag.com.